Australian met coal price rises in August

: Coking coal, Metals
26/09/01

First-tier fob Australia premium hard coking coal monthly average (PHCC) prices rose by almost 26pc on the year because firm sentiment in China's coking coal market resulted in several higher priced trades that supported the index.

The Argus-assessed Australian premium low-volatile (PLV) hard coking coal monthly average price increased to $236.25/t fob Australia in August, up by $48.57/t from a year earlier.

Several trades were reported over the course of the month, and each trade was done at a higher price than the previous deal, reflecting continued upward momentum in the market.

A major producer sold a 75,000t cargo of Saraji PHCC with an October laycan at $265/t fob Australia on 27 August. Traded price levels were notably higher than from a trade reported on 5 August where 75,000t of Peak Downs coking coal with 10-19 September laycan was traded at $216.58/t fob Australia. Both cargoes were sold to a Chinese trader, according to multiple market sources.

Firm spot prices in China's key coking coal producing regions, alongside continued tight availability of premium coking coal in Shanxi, encouraged China to participate in the seaborne market and purchase Australian cargoes.

Indian market participants remained mostly on the sidelines because India was still in its monsoon season, leaving steel demand muted. Steel mills were also weary of chasing higher priced cargoes on the back of pressured steelmaking margins.

For Indian buyers, current coal prices are well above levels earlier this year. Buying interest was around $265/t cfr India, although this remains at a significant price gap to current index levels, highlighting the resistance among end-users to chase the rally.

But India could soon return to the spot market as mills prepare for the post-monsoon period, although sources said that several Indian buyers are increasingly looking at alternative coal origins, notably from Mozambique and the US, as part of efforts to manage costs and reduce reliance on Australian seaborne coals.

By Lisa Cheng and Romil Sethi

Met coal PHCC prices ($/t)

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